US inflation surged again last month to a new 40-year high of 7.9%, propelled by surging costs for gas, food and housing. The February figures, the sharpest increase since 1982, are only a foretaste of higher prices to come as they do not factor in the impacts of the Ukraine war, Biden’s ban on Russian energy imports and tightened oil supplies that have sent prices at US gas stations and other energy commodities to record levels. Even before the war further accelerated price increases, robust consumer spending, solid pay raises and persistent supply shortages had sent US consumer inflation soaring. Housing costs, which make up about a third of the government’s consumer price index, have risen sharply, with apartment vacancy rates reaching their lowest level since 1984. Economists predict inflation will keep rising – in the short term. “Given the spike in crude oil and gasoline prices since Russia’s invasion of Ukraine, it will climb well above 8% in March,” said Paul Ashworth at Capital Economics. “An eventual drop back in energy prices, gradually easing of supply constraints and more favourable base effects mean that March should be the peak, with both headline and core inflation falling to nearer 3% by the end of this year,” he added. The rise in the cost of energy – as much as 20% in March alone – is predicted to add 0.8 percentage points to the consumer inflation index. Food prices were also up 1.0% in February, caused in part by a severe drought in the West and South that translates to a 2.3% m/m increase in prices for fruit and vegetables. Crop prices on the world market are also surging as a result of the conflict in Ukraine, a region that is estimated to produce 12% of the world’s wheat. The cost of wheat, corn, cooking oils, fertiliser and metals, including aluminum and nickel – key Russian and Ukrainian exports – have also soared since the invasion. “Inflation is not likely to roll over and begin to come down for several more months,” Michael Gapen, chief US economist at Barclays told Bloomberg. “This sets the stage for where we are now. And we need to see how long this conflict plays out and how disruptive the sanctions regime actually is.” The government’s report also showed that inflation rose 0.8% from January to February, up from the 0.6% increase from December to January. For most Americans, inflation is running far ahead of the pay rises that many have received in the past year. The disparity between the cost of living and wage growth has become the top political threat to president Joe Biden and congressional Democrats as the midterm elections draw closer. The US central bank is set to raise interest rates several times this year beginning with a quarter per cent hike next week. The Fed is also phasing out pandemic stimulus support in the bond markets, a move mirrored by the European Central Bank, which announced that it is scaling back stimulus plans sooner than anticipated as the Ukraine crisis drives up inflation expectations in the eurozone. On Wednesday, Riyadh US oil was down 12% to $108.70 a barrel, though still up sharply from about $90 before Russia’s invasion. If Europe were to join the US and the United Kingdom and bar Russian oil imports, analysts estimate that prices could soar as high as $160 a barrel. Even before Russia’s invasion, inflation was not only rising sharply but also broadening into additional sectors of the economy. Many prices have jumped over the past year because heavy demand has run into short supplies of items like autos, building materials and household goods. In the final three months of last year, wages and salaries jumped 4.5%, the sharpest such increase in at least 20 years. Those pay raises have, in turn, led many companies to raise prices to offset their higher labor costs. That pattern is akin to the “stagflation” dynamic that made the economy of the 1970s miserable for many Americans. Most economists, though, say they think the US economy is strong enough that another recession is unlikely, even with higher inflation. The Fed chairman, Jerome Powell, is keeping his options open. Last month, policy analysts were expecting a half-point interest rate rise, not the quarter point rise anticipated next week.